Guide to Credit Cards: Five Tricks Credit Card Companies Play On You
1. Refusing to set up direct debits. The best way to avoid paying late fees and to ensure that you never borrow money on your credit card is to have the outstanding monthly balance on your credit card direct debited to your checking account. Some credit card companies try to prevent this, in the hope that at some point you'll pay late or miss a payment altogether.
2. Bait and Switch. Credit card companies advertise great introductory deals, and then fail to deliver on them. Once credit card company heavily advertised an introductory offer of 5% cash back on all purchases. But some customers then found that the rate was quickly dropped to 1% on most purchases without their being informed.
3. "The Ball's in Your Court". The credit card business is all about cash management: lend at higher rates than you borrow, and get paid before you pay others. So it's no surprise that credit card companies sometimes leave it up to you to claim what you are owed, in the hope that you'll forget. "Cash-back bonus? You have to call us to claim it, then we'll send a check within a few weeks. By the time you cash the check, we'll have been holding money we owed you for at least a month!" One variety of this: some credit card companies advertise low interest rates or special reward offers, but if you don't explicitly ask for those terms when you sign up for the card, they give you different - and of course inferior - terms.
4. Failure to disclose clearly the terms of reward programs. You hear about a credit card with a fantastic rewards program. You sign up. But once you start using the card, you find the rewards are much lower than you expected. Why? The credit card company buried information about the rewards program's restrictions deep in the fine print of its literature. Or worse, it failed to provide the information altogether.
5. Selling you unnecessary credit card or credit insurance. Credit card companies sometimes play on their customers' fear and ignorance. "What if I lose my credit card, or someone steals the number? Am I liable?" Many credit cards offer various types of insurance and card tracking services. We think they'll all unnecessay and expensive. You're generally not liable for charges that other people make to your credit card without your knowlege. Keep a record of your credit card numbers and the telephone numbers of the card companies. If you lose your card, call them as soon as you find out, and you should avoid all liability. No need for insurance.
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